Mexican state officials resold fuel donated by Pemex, NGO says

A network of officials in 22 states illegally resold fuel donated by state-owned Petroleos Mexicanos (Pemex), the non-governmental organization Mexicans against Corruption and Impunity (MCCI) said Tuesday.

An investigation conducted by MCCI and the daily Milenio found that at least nine service stations sold fuel in 2015 that was originally donated by Pemex to the Defense Secretariat and the government of Mexico state, which surrounds the Federal District and forms part of the Mexico City metropolitan area, among other entities.

The information comes from Pemex reports to which MCCI had access and shows that five of the service stations identified in the investigation belong to Grupo Hidrosina Plus, a conglomerate that controls 24 corporations and whose shareholders include brothers William, Gabriel and Paul Karam Kaasab.

Grupo Hidrosina Plus’s shareholders, according to MCCI, “partnered in this business with businessmen from across the country with links to people in politics from different parties.”

The other four service stations, identified in the confidential report as being owned by Grupo Tecpex, belonged to Grupo Hidrosina Plus before being investigated by Pemex in 2015 and are now once again owned by the conglomerate.

Starting in 2007, Pemex donated asphalt and fuel - gasoline and diesel - to state and municipal governments.

Priority was given to areas where the oil industry has a large presence, with the donations being made via so-called “social licenses” to prevent conflicts in petroleum production zones.

The official documents obtained by MCCI show that Pemex donated fuel worth 6.28 billion pesos (about $328 million) annually between 2013 and 2018, or an average of about 1.05 billion pesos ($56 million) per year.

In 2015, Pemex discovered that some of the government entities receiving donations were unable to adequately account for the use of the fuel received, with irregularities being found in some states.

For example, the government of the Gulf state of Veracruz - led at the time by now-jailed former Gov. Javier Duarte - was unable to document the use of the fuel it received.

The federal auditor’s office found that the irregularities in Veracruz cost the Treasury more than 50 million pesos (about $2.6 million).

In addition to Veracruz, irregularities were also found in the states of Oaxaca and Tamaulipas, federal auditors said in a report.

The three states were found to have diverted 13.38 million liters of gasoline and diesel donations in 2015, federal auditors said.

The reports about the network broke amid a push by the new administration of President Andres Manuel Lopez Obrador to fight fuel theft across Mexico.

Stealing fuel from pipelines owned by Pemex and re-selling it on the black market has become a major criminal enterprise in Mexico.

This form of theft cost Mexico some $3.4 billion last year, according to official figures.

Since his Dec. 1, 2018, inauguration, Lopez Obrador has launched an all-out fight against the racket, deploying thousands of police and troops to increase the surveillance of pipelines.

The administration also adopted a change in Pemex’s method for shipping gasoline and diesel from refineries to urban distribution terminals, opting to transport more fuel via tanker trucks instead of pipelines.

The change caused severe supply problems in at least 10 states and Mexico City and led to the closing of service stations and panic purchases.